Where Does Skype Fit In Microsoft

For quite while there have been updates about Facebook and Google being interested in Skype. Today, the Wall Street Journal has confirmation that Microsoft is paying somewhere between $7 Billion to $8 Billion to acquire the VoIP telecommunication company. Back in 2005, eBay purchased Skype only to sell it off in 2009. While the business strategy saw ups and downs, Skype’s user base kept growing. According to Wikipedia, Skype had 663 Million registered users and claimed 25 Million users online at the same time not long ago.

Microsoft has Windows Live Messenger on the PC and Kinect (in the consumer market) and Lync (for the corporates) that essentially do what Skype does. So why bother with spending such insane amounts for Skype? The simple answer is maintaining dominance. If Google were get hold of Skype, Google would have a compelling solution for SMBs with Google Apps and Skype for over-the-Internet collaboration. At the same time, all those ~700 Million registered users would be running a Google service.

Skype decided to pull out their Windows Mobile client back in early 2010 and have not been able to do Windows Phone 7 client due to technical restrictions. However, being a cross platform service available on OS X, iOS, Android, Linux and Windows, Microsoft suddenly has a cross-platform communication software by tomorrow.

There is a belief that Microsoft will be coming up their answer to FaceTime for WP7 which will be powered by Lync in the background but might have a different branding, a re-branded Skype simply makes Microsoft’s efforts easier. While the number $8 Billion sounds crazy, there were some really smart people at Redmond crunching numbers projecting the worth of this acquisition. Keeping in mind cloud and communication in the next 5 years, Skype as part of Microsoft gives the Redmond company a huge user base and infrastructure that will not be part of either Facebook or Google or Apple.